Ex-OPI Finance auditor cuts $6.25 mln deal wth receiver

Thursday 18th September 2014 1 Comment

he auditor of failed lender OPI Pacific Finance has cut a $6.25 million deal with the firm's receiver after losing a bid to strike out parts of the case earlier this year.

ASX-listed Crowe Horwath, which acquired Lower Hutt-based Sherwin Chan & Walshe as a member firm, settled the claim by OPI receiver Colin McLoy of PwC, it said in a statement yesterday. The OPI receiver was seeking $45.4 million plus A$35.4 million, any additional losses assessed by the court, as well as interest and costs.

The claim, which will be recognised in Crowe Horwath's first half financial statements, was "settled on commercial terms," it said.

When the claim was lodged in August last year, Crowe Horwath said in a statement to the ASX the audit was investigated by the New Zealand Institute of Chartered Accountants in 2009 and no action was taken, and that the firm also assisted the Financial Markets Authority's investigation in September 2011, which also didn't result in any action against the auditor.

In November, the regulator went on to charge former OPI Pacific directors Mark Lacy, Jason Maywald, David Anderson and Craig White under the Securities Act with making untrue statements in the 2007 offer document. Lacy, White and Anderson entered not guilty pleas in June, and the National Business Review yesterday reported a hearing set down for Sept. 17 was adjourned to consider whether the High Court was more appropriate to hear the case.

In March, Justice Robert Dobson turned down a bid by Sherwin Chan & Walshe for a partial strike out of the receiver’s claim that the auditor breached its obligations in relation to the lender’s 2007 financial statements, while saying testimony by a former executive could frustrate the claim. The hearing was in the High Court in Wellington.

OPI's receiver claimed that if the audit had been completed competently, the lender would have stopped trading earlier, which would have prompted directors to exercise a put option requiring Octaviar to pay OPI, then known as MFS Pacific Finance, the $61.6 million face value of loans in arrears rather than the $23.1 million payment made under the option.

The finance company went into receivership in September 2009 after a 16-month moratorium and was put into liquidation in November 2011. At the time of the receivership it owed almost 11,000 investors about $256 million, of which 3.25 cents in the dollar has been repaid, on top of the 22.19 cents investors received during the moratorium.

Comments from our readers

On 18 September 2014 at 10:44 am Ivan said:

Another cop out for investors. It's only to be expected when you see who the receiver is.PWC have done very well out of all the receiverships that they have managed in the last 7 years.